In substance, Minenergo suggests the replacement of MET with the EPT given that no changes to export duty implementation are considered. It is difficult to estimate the effect of the potential change on the tax regime for the industry (and some particular projects and companies), but our rough calculation on the base of 2014 numbers suggests that in the case of EPT, the tax rate for some average brownfields is to be very similar to the current MET rate, some USD 23.8/bbl. There is a separate question on how the budget is to compensate for the shortfall in income, as the MET is expected to increase to some USD 40/bbl (as per the tax manoeuvre), while EPT depends primarily on oil price dynamics. In the second case, with the tax on financial results, our simplistic calculation suggests that it might be even higher than the current MET (some USD 26/bbl) given that uplift is limited to 10% of oil revenues.
We believe that it is a long way ahead before any drastic changes to industry oil taxation take place. We are still waiting for the tax manoeuvre (the issue that has been discussed by the ministries and the sector since the beginning of the year) to be approved and the final numbers to be announced. We therefore do not expect any stock reaction to the news.